The Long Term Investor

Costco released some very nice data today.......of course....the stock is down by 1.67%.

Costco's (COST) Comparable Sales Continue to be Impressive

https://finance.yahoo.com/news/costcos-cost-comparable-sales-continue-152003229.html

(BOLD is my opinion OR what I consider important content)

"Costco Wholesale Corporation’s COST growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its upbeat performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering impressive sales and comparable sales numbers.

Sales Continue to Accelerate

Costco’s net sales increased 19.2% to $16.47 billion for the retail month of October — the four-week period ended Oct 31, 2021 — from $13.82 billion in the last year. This followed an improvement of 15.8%, 16.2% and 16.6% in September, August and July, respectively.

Comparable sales for October jumped 17.5%. This followed an increase of 14.3%, 14.2% and 13.8% in September, August and July, respectively. Comparable sales for October reflect an improvement of 17%, 20.6% and 17% in the United States, Canada and Other International locations, respectively.

Excluding the impacts of changes in gasoline prices and foreign exchange, comparable sales for the month under discussion rose 11.8% on improvements of 11.7%, 10% and 14.7% in the United States, Canada and Other International locations, respectively.


Zacks Investment Research
Image Source: Zacks Investment Research

E-Commerce on the Rise

Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, both online or at stores. The company has been gradually expanding its e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan, and Australia. We note that e-commerce comparable sales rose 16.5% in October. This followed increases of 10.6%, 2.8% and 7.4% in September, August and July, respectively.

To drive its online sales, the company in collaboration with Uber Technologies had earlier launched a grocery delivery pilot in 25 locations across Texas. This allows members to get their on-demand grocery delivery within hours with Uber and Uber Eats mobile apps. Again, Costco Logistics has boosted e-commerce capabilities and facilitated selling of "big and bulky" items. We note that Costco Logistics sales accounted for 24% of e-commerce sales in the final quarter of fiscal 2021.

Wrapping Up

One of the widely recognized names in the Retail – Discount Stores industry, Costco has been providing its members with quality goods and services. The company, which is among the biggest winners amid the pandemic, sells products at discounted prices to draw customers, who have been seeking both value and convenience.

This Zacks Rank #1 (Strong Buy) company is focused on ramping up investments in the wake of the rising competition from the likes of Walmart WMT, Dollar General DG and Target TGT. We believe that Costco’s business model and commitment toward opening membership warehouses will continue to drive traffic. Shares of the company have appreciated 35% in the past six months compared with the industry’s growth of 14.1%."

MY COMMENT

GO....Costco....GO. Those are some strong numbers above. SO.....lets sell the stock. At least that is what the markets are doing today. Short term insanity.

 

BUMMER......what a waste of a perfectly good day when I presume all the averages hit new all time highs. I was in the red today.....slight to moderate. I got beat by the SP500 by 0.60%.

Nike, Costco, and Tesla were my downfall today. Tomorrow......is a new day.

 

HERE is a nice little article on some of the economic data.

Thirsty for Econo-Data? Here Is Your Thursday Roundup
Shipping and productivity and factory orders, oh my!

https://www.fisherinvestments.com/e...-for-econo-data-here-is-your-thursday-roundup

(BOLD is my opinion OR what I consider important content)

From last Friday:

"Happy Day Before Friday, and what means of celebrating could be great-a than data? (Sorry.) Economic record-keepers globally were busy bees today, releasing a smorgasbord of stats for investors to mull over. As always, they are all backward-looking, and stocks generally care about what happens over the next 3 – 30 months, not what happened a few weeks ago. But we did find some nuggets of interest, so let us share.

The record-high trade deficit is not the real story.

The US imported $80.9 billion worth of goods and services more than it exported in September, prompting the usual flurry of headlines hyping the record-high gap. We will leave them to stew over that meaningless statistic, which has no bearing on the country’s economic health. After all, imports represent domestic demand, and foreign investment inflows offset the trade deficit. It is an accounting factoid. Nothing more.

But we think the stats under the hood offer a pretty good snapshot of how the global logistics logjam works. Exports of goods fell -4.7% m/m, the biggest drop since last year’s lockdowns, while goods imports rose 0.8%.[ii] The mismatch seemingly stems not from plunging factory output, which dropped only -0.8% in September, but from a lack of shipping containers.[iii] Or more specifically, a lack of readily available empty containers. The actual containers are everywhere, stacked a mile high at ports, in empty lots surrounding ports and at inland freight hubs. But there aren’t enough truck chassis and drivers to get them to warehouses for unloading. Nor are there enough warehouse workers to do said unloading. Or enough chassis and drivers to then take the empty containers to the exporters who are desperate to fill them. Adding insult to injury, countless containers have made the return trip to Asia empty so they can swiftly ferry more goods to us. Reloading them first would take too much time, potentially exacerbating US supermarket shortages.

The upshot of this is that, despite the scores of ships idling by major US ports, many are still docking and unloading, keeping shortages here milder than they might otherwise be. That 0.8% rise in goods imports is good news. But it does appear the logistics problems are hitting exporters disproportionately, which is not so good. On the bright side though, most expect this to even out early next year, as shipping traffic slows after the holidays and rising wages entice more drivers into the trucking industry. That should eventually unleash the backlog of pent-up exports and prevent all those stacked containers from becoming permanent art installations.

Seriously, that huge productivity drop is good news.

Yes, really. We know productivity’s -5.0% annualized drop in Q3 is the biggest since 1981, and we know it doesn’t sound good. Some pundits say it points to inflation getting worse from here. But we interpret the data differently.

The BLS’s productivity measure is output divided by hours of labor. Both sides of that fraction have suffered big disruptions from lockdowns, with output recovering faster than hours worked. (Exhibit 1) Output, which hit a record high last quarter, passed its pre-lockdown peak in Q2. Hours worked is still a mite below its prior high. But it did catch up quite a bit in Q3, rising 7.0% annualized—a good sign that businesses are starting to overcome the labor shortage.[iv]

Exhibit 1: Productivity Deconstructed


Source: FactSet, as of 11/4/2021. Output and Hours Worked, Q1 2017 – Q3 2021. Indexed to 100 in 2012.

Also lost in the shuffle is the simple fact that productivity isn’t in the doldrums. The level of output per hour worked is actually at its fourth-highest reading on record, thanks to huge efficiency gains companies have made since the pandemic began. Q3’s drop simply reflects companies’ exhausting their ability to do more with less. The last couple of years are basically an outsized version of productivity’s usual path surrounding a recession.

Exhibit 2: The US Is Still Pretty Darned Productive


Source: FactSet, as of 11/4/2021. Output per Hour Worked, Q1 2017 – Q3 2021. Indexed to 100 in 2012.

Actually, German factory orders weren’t weak.

“Lockdown skew” also sums up our take on German factory orders, which eked out a 1.3% m/m rise in September after August’s -8.8% drop. Pundits described the small rebound as feeble, implying Germany’s industrial sector is being severely hobbled by the aforementioned supply chain problems. Yet here, too, we think it is necessary to look further back in time to put the most recent results in context. Factory orders took a severe hit during last year’s lockdowns, driving big catch-up growth when the country reopened—which happened in fits and starts through summer 2021. Much of Europe also reopened this summer, which we think explains the big boom in July orders and subsequent drop-off in August. Yet even with orders remaining below that peak, they remain far ahead of orders in the years before the pandemic—and about in line with demand during Germany’s 2016 factory boomlet.

Exhibit 3: September German Factory Orders in Context


Source: FactSet, as of 11/4/2021. German Industrial Orders, real and seasonally adjusted, November 2001 – September 2021.

Now, high orders may not predict big output growth in the immediate future, as some factories are short on parts and labor. IHS Markit’s latest purchasing managers’ indexes show supplier delivery times remain strained and order backlogs are piling up. But as we have written before, supply issues are likely—all together now!—transitory. They are a headwind, but they don’t signal creeping economic weakness the way a demand dearth would. And based on factory orders, demand just doesn’t seem to be a problem today."

MY COMMENT

So there you have it once again. What seems obvious on the face of the shallow little articles you see every day.....often.....tell a different story when all the facts are put out there. We are looking GOOD all the way to year end and well beyond.

 

TireSmoke mentioned this earlier....here is the story.

Chipmaker AMD just scored a big deal with Meta

https://finance.yahoo.com/news/chipmaker-amd-just-scored-a-big-deal-with-meta-160059677.html

(BOLD is my opinion OR what I consider important content)

"Advanced Micro Devices (AMD) is about to enter the metaverse.

The chip giant said its EPYC chips were selected by Meta (formerly known as Facebook) to help power its data centers at its virtual Accelerated Data Center Premiere event Monday. AMD explained the two companies worked together to develop a high-performance, power-efficient processor based on the company's 3rd Generation EPYC processor.

"Adding Meta is certainly a very significant piece," AMD CEO Dr. Lisa Su said on Yahoo Finance Live.

Shares of AMD shot higher by 10% in afternoon trading.

The high-profile win accompanied several announcements from AMD, including some specifics around upcoming EPYC processors codenamed “Genoa” and “Bergamo.” AMD dubbed the Genoa processor as the "world’s highest performance processor for general purpose computing."

Su told Yahoo Finance Live we are living through a high-performance computing "megacycle" that shows no signs of slowing down.

AMD continues to be one of the hottest tech stocks in the market as it wrestles market share away from rival Intel.

Shares of AMD are up 65% year to date, out-performing the Nasdaq Composite's 24% gain. Intel's stock is up 2% on the year, while Nvidia has skyrocketed 127%.

The company's third quarter performance helps to explain the stock's meteoric ascent.

Sales rose 54% from a year ago to $4.3 billion. Earnings per share surged 134% year-over-year.

"We believe AMD will continue to gain material server/PC share in 2021/2022driven by performance leadership while Intel continues to struggle on10/7nm," wrote Barclays analyst Blayne Curtis in a recent note to clients.

Curtis rates AMD's stock at an Overweight (equivalent to a Buy rating) with a $135 price target."

MY COMMENT

Little brother.....AMD....is kicking big brother's......Intel's.....ass. Back in the days of Moore's Law......Intel was the king of the jungle........now.....never-mind. The future appears to belong to Nvidia and AMD. Fine with me....I hold Nvidia and have not had any interest in Intel for a long time.

 

Geting ahead of myself....but I can not resist the great CRANBERRY debate.

The most disliked Thanksgiving side dishes, according to Instacart
What do Americans wish weren’t on their Thanksgiving plates?

https://www.foxbusiness.com/lifestyle/most-disliked-thanksgiving-side-dishes-instacart

(BOLD is my opinion OR what I consider important content)

"November is here, and the people have spoken: Please don’t pass the candied yams this Thanksgiving.

This is according to survey intel from polls conducted by Instacart, the nationwide grocery delivery platform, in partnership with The Harris Poll, on more than 5,000 American adults in October 2021.

"This year, many Americans are looking forward to coming together to celebrate Thanksgiving, with a majority who are planning to host or contribute dishes for Thanksgiving dinner this year (85%) saying they plan to make a traditional Thanksgiving meal for friends and family," Laurentia Romaniuk, Instacart’s trends expert, shared with Fox Business.

Romaniuk added, "However, there are some Thanksgiving menu choices that Americans are divided over when it comes to key parts of the meal, like white versus dark turkey meat, homemade and canned cranberry sauce, and whether to make homemade pies or serve premade pies from the store. One thing we can all agree on is that butter is the secret ingredient in nearly every Thanksgiving dish. Last November, Instacart delivered 3,399,218 pounds of butter, which is over a million pounds more than we delivered the month before."

So what do Americans wish weren’t on their Thanksgiving plates? According to the results from the surveys, these are among the worst Thanksgiving dishes according to Americans (the percentage that follows each dish represents the percentage of people surveyed who believe it to be true):

• Candied yams: 27%
• Green bean casserole: 25%
• Cranberry sauce: 24%
• Sweet potato casserole: 21%
• Stuffing: 12%
• Salad: 12%
• Mashed potatoes: 8%
• Dinner rolls: 7%

Along with the findings — candied yams, green bean casserole, and cranberry sauce aren’t exactly the fan-favorites we thought — Instacart revealed several other interesting preferences when it comes to Turkey Day feasting.

First, based on the Instacart/Harris Poll surveys, 93% of Americans eat turkey on Thanksgiving, with nearly half of them (44%) preferring white meat, with a quarter of Americans preferring an equal mix of white meat and dark meat, 20% preferring dark meat, and 11% not having a preference.


Then, on the cranberry sauce front, it appears that there’s a close debate over which type of cranberry sauce is better when it comes to homemade versus canned versions. Based on the survey findings, 37% prefer homemade cranberry sauce, while 35% prefer canned cranberry sauce. 21% of survey respondents reported that they don’t eat cranberry sauce on Thanksgiving, and 3% shared that they have never tried the fruity condiment.

"Despite canned cranberry sauce being so controversial and a hot topic at many Thanksgiving dinner tables across the country, Instacart purchase data shows that sales for the Thanksgiving staple have increased by 32% over the past two years," said Romaniuk in a company blog post. "There are different reasons why consumers may prefer canned cranberry sauce including tradition, flavor, nostalgia, texture, convenience, or the fact that it can be served on a dish in the shape of a can, which adds an element of levity to the meal."

To see where your state stands on the cranberry sauce spectrum, check out the infographic below.


The survey also revealed information and data on how Americans feel about sweet potatoes, butter, and pies. Perhaps most surprisingly, according to Instacart purchase data from November 2020, the company delivered 3,399,218 pounds of butter in that month alone, a whopping 1,079,036 pounds more than what they delivered in October 2020."

MY COMMENT

NOT really much of a survey when saying that 27% dont like candied yams.....that means that potentially 73%.....a huge majority......do.

As to the great cranberry debate. YES.....it is a nationwide issue and an issue in our family. Being from the South.....we ALL strongly prefer the canned cranberry. ALL....that is......except for one little part of the family that lives in the Pacific Northwest.....a hotbed or RADICAL home-made cranberry FANATICS. The EAST and the SOUTH and most of TEXAS strongly prefer the canned Cranberry.

 

Ok....that's it......oldmanram. We have to finally do something. Your wife and her account are out of control. Constantly making us look bad. We are going to have to have Emmett and a couple of his clowns.....pay a little visit to her investment advisor.........and..... take care of this.

 

Yes.....I am staying hungry.......oldmanram......all the time. I never stop STRIVING......is it compulsion, obsession, mania, insanity,....I dont know. Here I retire when I am young and than I am driven to do more and more in music. Even now at age 72......it never stops. I have been like that my whole life.

I guess that is a good thing..........if it causes you to stay active and to think.

 

For some reason your post above and the comment about your portfolio reminded me of the old Mae West quote:

"When I'm good, I'm very good. But when I'm bad I'm better."

Not that this applies to stock investing.

 

Looks like we are finally at the end of the road for GE.

General Electric to Split Into Three: Aviation, Health, Energy

https://www.newsmax.com/finance/companies/ge/2021/11/09/id/1043867/

(BOLD is my opinion OR what I consider important content)

"The storied American company General Electric will divide itself into three public companies focused on aviation, healthcare and energy. The company, founded in 1892, has refashioned itself in recent years from the sprawling conglomerate created by Jack Welch in the 1980s to a much smaller and focused entity. It was heavily damaged by the financial crisis.

With its announcement Tuesday that it will spin off its health care business in early 2023 and its energy segment including renewable energy, power and digital operations in early 2024, General Electric may have signaled the end of the conglomerate era.

“By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employee Chairman and CEO Lawrence Culp Jr. said in a prepared statement.

Culp will become non-executive chairman of the health care company. Peter Arduini will serve as president and CEO of GE Healthcare effective January 1, 2022. Scott Strazik will become CEO of the combined renewable energy, power, and digital business. Culp will lead the aviation business along with John Slattery, who will remain its CEO.

It will maintain a 19.9% stake in the health care unit. Aviation is the most profitable part of GE’s business. The company produces jet engines, aerospace systems, replacement parts and maintenance services for commercial, executive and military aircraft including fighters, bombers, tankers and helicopters.

The company has spent years undoing its massive transformation under Jack Welch, an era of unbridled growth that gave birth to sprawling conglomerate in the 1980s and 1990s. From lightbulbs to appliances or healthcare to financial services, General Electric had a hand in it.

Once the Most Valuable Company in the World

During the late-1990s boom, GE’s soaring stock price made it the most valuable company in the world. GE’s revenue grew nearly fivefold during Welch's tenure, and the firm’s market capitalization increased 30-fold. However, the financial crises of 2007-2008 revealed the how exposed GE was to risk, particularly through its financial division.

In 2015, GE announced a radical transformation of the company, vowing to shed billions in assets to better focus on the company’s industrial core, namely power, aviation, renewable energy and healthcare. That led to some tumult in leadership. CEO Jeff Immelt replaced by John Flannery in 2017, who was ousted just a year later with Culp taking over and vowing a massive corporate transformation.

The company said Tuesday that it expects operational costs of approximately $2 billion related to the split, which will require board approval. The Boston company also announced Tuesday that it expects to lower its debt by more than $75 billion by the end of the year.

Shares jumped more than 8% before the opening bell.

MY COMMENT

The end of a HUGE and very long ERA. Although the company is just a shadow of its former self under Jack Welch. I held this stock as a long term holding for many, many, years. I SOLD all shares when Welch left the company and Immelt took over. I did not want to have anything to do with the company under Immelt.

The end of the CONGLOMERATE. YES....for the most part. Although I would argue that Amazon is a modern conglomerate. AND.....actually.....when GE was a HUGE conglomerate it was the most successful and largest company in the world. The conglomerate business model was very successful across many companies that were massive business leaders. They were money machines. It is too bad that this type of business model is no longer appreciated......just like the disrespect currently for stock splits.

I would peg the END of the road for GE as happening when they got rid of their financial arm. The financial division was mismanaged under IMMELT and basically thrown away....but I believe was the guts of the company. The result of that decision to ditch the financial division was a critical reason that the company is now where it is today........an irrelevant business.

 

Bad news for the financial advising business.

Rich millennials to financial advisers: Thanks for the golf invite, but you can’t invest my money
About 70% of households with a net worth of $500,000 or more headed by a person under 45

https://www.foxbusiness.com/markets/millennials-financial-advisers-invest-money

(BOLD is my opinion OR what I consider important content)

"Michael Martocci, a 26-year-old startup founder, ignores the golf invitations and other solicitations from the Goldman Sachs Group Inc. financial adviser trying to land him as a client.

Eighteen holes isn’t particularly appealing to the Miami-based Mr. Martocci, and neither is paying for financial advice. Instead, he oversees his hundreds of thousands of dollars in investments himself. He funnels 90% of his money into cryptocurrency. To check his stocks, he pulls up Robinhood Markets Inc. on his phone.

"It’s easy to manage $500,000, $1 million yourself," said Mr. Martocci, who says he spends less than an hour a week monitoring his investments.

More rich young investors are opting to go without a traditional financial adviser. Instead, they are betting they can get good-enough investment options from do-it-yourself digital platforms that are cheap and easy to use. Many also want to invest in riskier assets, like cryptocurrencies and tech startups, that mainstream advisers often don’t offer.

About 70% of households with a net worth of $500,000 or more headed by a person under 45 had an investing style that was either strongly or mostly self-directed in 2019, up from 57% in 2010, according to an analysis of Federal Reserve data by research firm Aite-Novarica Group. Nearly half of those households aimed to take an above-average level of risk in exchange for an above-average rate of return, up from 35% in 2010, the analysis found.

The wealth-management businesses at top firms like Morgan Stanley and Bank of America Corp.’s Merrill Lynch continue to mint profits with moneyed older clients. But competition from digital upstarts is growing, and traditional firms know they need to attract the next generation of lucrative customers.

Advisers say they do far more than just put a client’s money into stocks and bonds. They can help clients map out financial goals and prevent them from making rash decisions. They can also handle complex portfolio rebalancing and tax planning for busy professionals.

Merrill said it has diversified its adviser force and improved its technology. People under 45 made up 20% of new clients this year, up from 10% five years earlier, the firm said. Morgan Stanley has spent billions in recent years buying firms that it hopes will help it attract younger clients, like online broker E*Trade and employee-stock-plan administrator Solium.

Wealth-management firms also offer clients special access to some alternative investments, such as funds tied to private equity. But many either restrict or ban crypto investments and provide limited access to shares in pre-IPO companies.

Big firms are wagering that reluctant young people may hire an adviser when they are older. "When you start to go from the wealth accumulation phase to the retirement phase, the world gets much more complicated," said Jed Finn, chief operating officer of Morgan Stanley Wealth Management and head of corporate and institutional solutions. "People don’t think they need advice until they need advice."

Studies suggest that advisers can get caught up in chasing hot stocks, much like individual traders. During the 2008-09 financial crisis, financial planners often sold their clients’ stocks as the market fell. Still, when markets are rising as they are now—U.S. stock indexes have hit records this year—it is easy for professional and amateur investors alike to look smart.

When Travis Chambers, 33, landed a $9 million windfall from selling part of his advertising agency this year, he interviewed four financial advisers over video. He thought they put too little effort into explaining how their investments were unique and worth the fees. And none of them brought up crypto or real estate, the investments that most interested him.

Mr. Chambers, who lives in Boise, Idaho, decided to strike out on his own. He put $1 million into a hedge fund run by his business partner’s neighbor. He earmarked another $1.5 million to build offbeat Airbnb rentals in low-income areas. One project involves building futuristic huts in a dry lake bed in Utah.


U.S. Bancorp recently offered to give Mr. Chambers a personal line of credit at a 2.75% interest rate if he puts $1 million into a brokerage account.

Mr. Chambers is considering the offer, but would keep managing most of his money on his own. He expects he would use the credit line to buy cars and a plane, which he thinks will increase in value.

When Cabell Hickman turned 18, her stepfather gave her money to buy stocks. He later invited her to invest alongside him in private companies. A few years ago, she put $100,000 into a blockchain fund run by a friend she met in college. Now 26, she is managing her own $6 million portfolio.

Her stepfather died last year, leaving Ms. Hickman a complex estate, and for the first time she is considering hiring a professional financial adviser.

Ms. Hickman, a higher-education consultant, said she has found some good if homogeneous options: "I’m talking to, frankly, a bunch of old men."

Mr. Martocci, who has been dodging the Goldman adviser, has most of his wealth tied up in his company, SwagUp. It creates and distributes branded items like tote bags and coffee mugs.

He said that at this point in life, he prefers risky investments that could potentially double or triple his money over those promising "market type returns."

"Most young people don’t really care about the downside," Mr. Martocci said. "They care about the upside and it being this fun thing."

He plans to use a financial adviser, he said, if he gets a windfall from selling the company."

MY COMMENT

The poor financial advisors are being edged out by technology, the spread of information, and the RISKY investing habits and thinking that is taking hold across the money world. Young people are doing their own thing without regard to ACTUAL RISK.

I dont think most advisors really do much for the average client that they could not do themselves. Perhaps the best thing they do is protect people from their natural urge to take outsize RISK and do STUPID things with their money.

Do I really care how younger people choose to handle their money or what they choose to invest in.....NO. For better or worse....whatever they do....it is their money. As for me.....I will stick with the long term investing and my stocks and funds. I have NO interest in all the very RISKY, SEXY, investments out there that are being SOLD to people at the moment.

 

So.....looks like the markets are now open. We start the day with a mixed market....the DOW in the red.....and....the SP500 and NASDAQ in the green. Seems like a typical day in the market neighborhood.

 

I just got a call from my electrician that is coming today to re-set my kitchen switches and plugs for the new deeper backsplash. He was at Home Depot buying the stuff that he is going to need. I was glad to hear that he is buying his supplies at HOME DEPOT......a company that I own. It is amazing how much of the contractor business that company has now captured. I love it......I will be paying the electrician....while he indirectly benefits me by doing his buying of supplies at Home Depot.

I think I will go and do a little touch up painting while I wait for him to arrive.

COME ON.......LETS MAKE SOME MONEY TODAY.

 

Markets have turned negative as the inflation....fear mongering.....is being ramped up again. I am still in the green by a small amount.....a significant change from earlier....when I was up by much more for the day.

I still have good feelings for the close today.....although the CPI data has big potential to weigh on the markets today and tomorrow.

 

Here is the economic data that no one will care about in a few days.

U.S. producer prices increase solidly in October

https://finance.yahoo.com/news/u-producer-prices-increase-solidly-143825866.html

(BOLD is my opinion OR what I consider important content)

"WASHINGTON (Reuters) - U.S. producer prices increased solidly in October, driven by surging costs for gasoline and motor vehicle retailing, suggesting that high inflation could persist for a while amid tight supply chains related to the pandemic.

The producer price index for final demand rose 0.6% last month after climbing 0.5% in September, the Labor Department said on Tuesday. In the 12 months through October, the PPI increased 8.6% after a similar gain in September.

Economists polled by Reuters had forecast the PPI advancing 0.6% on a monthly basis and rising 8.7% year-on-year.

"The acceleration in U.S. inflation may not fade as quickly as previously thought, particularly for businesses because of the global supply-chain issues," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

"Elevated inflation is turning up the heat on the Federal Reserve but they haven't shown signs of buckling as they will stomach higher inflation to get the labor market back to full employment quickly."

More than 60% of the increase in the PPI last month was due to a 1.2% rise in the prices of goods, which followed a 1.3% jump in September. A 6.7% surge in gasoline prices accounted for a third of the rise in goods prices. There were increases in the prices of diesel, gas and jet fuel as well as plastic resins.

Wholesale food prices dipped 0.1% as the cost of beef and veal tumbled 10.3%. Prices for light motor trucks fell as the government introduced new-model-year passenger cars and light motor trucks into the PPI.

Services gained 0.2% last month after a similar rise in September. An 8.9% jump in margins for automobiles and parts retailing accounted for more than 80% of the increase in services. The cost of transportation and warehousing services jumped 1.7%.

There were also increases in the wholesale prices of apparel, footwear, truck transportation of freight, food and alcohol retailing, hospital outpatient care as well as machinery, equipment parts and supplies. But portfolio management fees fell.

Excluding the volatile food, energy and trade services components, producer prices shot up 0.4%. The so-called core PPI gained 0.1% in September. In the 12 months through October, the core PPI rose 6.2%. That followed a 5.9% advance in September."

MY COMMENT

NO surprise here....the data was exactly as anticipated. But.....the markets are still reacting anyway.

I continue to have ZERO concern for inflation. With the re-opening and supply issues I would be very concerned if we were NOT seeing this bit of inflation. In daily life I hear people talking about inflation all the time.....I just keep my mouth shut.....it is simply an anecdotal issue....but no no will accept that. As usual......I see the future and am much more concerned with DEFLATION than inflation.

 

In conjunction with the above post.....we did our big monthly grocery shop yesterday at HEB.....including everything that will be needed for thanksgiving.

The store was crowded and I was surprised that the shelves were fully stocked. Last month there were many items that were available but skimpy on the shelves. It was perfectly normal in terms of everything being available. The ONLY item that was unavailable was Frito corn chips. I have no idea why....was there a run on Fritos? Every other sort of chip was fully available.

There was NOTHING going on in that store to indicate any sort of supply chain issue.

 

This is good news for the economy and is an indicator of the return to NORMAL.

U.S. credit card use returning to pre-pandemic patterns, NY Fed report finds

https://finance.yahoo.com/news/u-credit-card-returning-pre-160745375.html

(BOLD is my opinion OR what I consider important content)

"(Reuters) - U.S. consumers are spending more and once again ramping up credit card balances, reversing a shift that happened during the crisis when consumers scaled back spending and substantially paid down credit card debt, according to a report released on Tuesday by the Federal Reserve Bank of New York.

After rising by $17 billion in both the second and third quarters, credit card use appears to be returning to pre-pandemic patterns, the researchers said. However, balances were still $123 billion lower than they were at the end of 2019.

"As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic, namely reduced consumption and the paying down of balances," Donghoon Lee, a research officer at the New York Fed, said in a statement. "At the same time, as pandemic restrictions are lifted and consumption normalizes, credit card usage and balances are resuming their pre-pandemic trends, although from lower levels."

Credit cards typically follow a seasonal pattern where balances see "modest" increases in the second quarter and third quarter, followed by a more substantial increase in the fourth quarter, researchers said. Consumers then usually reduce those balances in the first quarter as they pay off their holiday spending, they wrote.

During the pandemic, however, households supported by direct cash payments and forbearance programs that paused payments on mortgages and student loans substantially reduced their credit card debt.

Now that forbearance programs are winding down, some of those consumers that paid down debt will be able to use some of their available credit to make ends meet while they search for jobs, New York Fed researchers said.

The report also found that total household debt increased by $286 billion in the third quarter to $15.24 trillion, driven mostly by a $230 billion increase in mortgage balances. Total debt balances are now $1.1 trillion above where they were at the end of 2019, the report showed.

Auto debt increased by $28 billion in the third quarter and student loan balances grew by $14 billion.

The findings showed that consumer debt delinquencies remain low, thanks in part to forbearance programs and other federal aid.

Credit card issuance for lower credit score borrowers is back to pre-pandemic levels after declining at the start of the pandemic. But the majority of new credit issued across all types of loans is being granted to high-quality borrowers, researchers said."

MY COMMENT

I personally dont carry any credit card balances. I do put larger purchases on a rewards card that earns me 2% cash back on any charge. We usually end up with about $2000 a year in cash back which we use for vacation MAD MONEY.

This data is shows another step in the re-opening. If this keeps up it looks like people will ACTUALLY have to get a job pretty soon. The FREE STUFF is coming to an end.......and that, will be a good thing for the economy.

 

We have seen a nice little run up in Amazon lately. The year to date number is now up to 11.70%. There is plenty of time for the stock to get to 15-20% by year end. I am adjusting my "possible" gain for the stock for 2021 to 16-22%. If we can get into that range it would be a very nice come-back from what we have seen for most of the year.